U.S. ex rel. Hagood v. Riverside Healthcare Ass’n – March 2015 (Summary)

FALSE CLAIMS ACT

U.S. ex rel. Hagood v. Riverside Healthcare Ass’n, Civil Action No. 4:11cv109 (E.D. Va. Mar. 23, 2015)

The United States District Court for the Eastern District of Virginia dismissed multiple False Claims Act (“FCA”) claims brought by a pair of relators against a hospital, holding that the allegations failed to meet the FCA’s heightened pleading requirements. The relators were employed as the emergency room’s administrator and as the Administrator of the defendant hospital. The relators alleged that due to the hospital’s faulty software system, the hospital submitted false claims to the government for services not rendered, pharmaceuticals not administered, services that were “upcoded,” and for services that were provided by unqualified personnel. Additionally, the former administrator relator claimed she was retaliated against after she informed the hospital that certain billing practices were illegal, and was subsequently fired. In their complaint, the relators provided a table of individuals, including the patient’s name, account number, date of service, and service item code, who allegedly were improperly charged by the hospital. The relators assert that twenty to thirty percent of the patients listed in the table were covered by a Government Payor program because Government Payors served at least twenty to thirty percent of the hospital’s patient base. The hospital motioned to dismiss the claims stating that the relators failed to meet the FCA’s heightened pleading requirements, specifically, that the relators failed to allege any particular false claim that was actually presented to the government for payment.

The relators conceded that their claims for retaliation and for billing for services provided by unqualified personnel failed to satisfy the FCA’s heightened pleading requirements, therefore the court dismissed them. Next, the court dismissed the relators’ remaining claims, that the hospital fraudulently billed for services not rendered, pharmaceuticals not administered, and “upcoded” services, because the relators’ allegations failed to identify specific false claims that were actually presented to Government Payors. Furthermore, the relators’ allegations failed to reasonably imply that the hospital submitted false claims to the government for payment. The court explained that the relators failed to connect any overcharging to the submission of bills to Government Payors. Instead, the relators only alleged that because twenty to thirty percent of the hospital’s patients are supported by Government Payors, twenty to thirty percent of the billings must violate the FCA.